President Barack Obama speaks about the Affordable Care Act in the East Room at the White House in Washington. / Charles Dharapak, AP

by Laura Ungar, The (Louisville, Ky.) Courier-Journal

by Laura Ungar, The (Louisville, Ky.) Courier-Journal

LOUISVILLE, Ky. -- With Affordable Care Act set to begin in earnest next year, fears are mounting that insurance premiums will skyrocket when American workers re-enroll for health benefits through their jobs.

But experts and a newly released study say those fears appear largely unfounded.

"The rate-shock concerns were overblown," said Christine Eibner, a senior economist at Rand Corp., a California-based nonprofit research group that is releasing a report Thursday that examines insurance premiums for workers at small firms. "It's likely the effect will be small."

The Rand report found that, with the Affordable Care Act, also known as Obamacare, workers at firms employing fewer than 100 workers are expected pay almost 6 percent less in premiums in 2016 than without the health care reform law.

Nationally, the report said, average premiums for equal plans would cost $5,837 with Obamacare in effect and $6,192 without it - a $355 savings under the Affordable Care Act. Premiums at large companies weren't examined in the report.

Federal data show that, in 2012, average premiums for workers at firms with fewer than 100 employees ranged from $5,256 to $5,751, and premiums have been climbing steadily during the past decade - both for individual and family coverage.

But while Obamacare may hold down premium increases slightly across the board, experts and business leaders say the precise effects on individual small businesses are harder to predict because there are many factors at play, including a company's size, the age and health of employees, and their plan coverage.

"The ACA has the potential to bring a much bigger increase in premiums" for some small firms, said Bryan Sunderland, senior vice president for public affairs at the Kentucky Chamber of Commerce.

According to the Kaiser Family Foundation, almost 60 percent of American adults under age 65 - 149 million in all - are covered by employer-sponsored plans, which is by far the most common way people get health insurance.

Also, 36 percent of covered workers are in "grandfathered" plans that are exempt from the law's requirements.

William Roberts, a health care attorney for Indianapolis-based Hall Render, which has offices in Louisville, said he expects Kentucky and Indiana to reflect national trends when it comes to premiums.

However, "there's a lot we don't necessarily know yet," said Elizabeth Munnich, an assistant professor of economics at the University of Louisville. "We're going to have to see how it plays out."

Large firm predictions

Workers who get insurance from their employers have been seeing their premiums rise for years.

A report released this month by Kaiser and the Health Research & Educational Trust showed that premiums increased modestly from 2012 to 2013, rising an average 5 percent for single coverage and 4 percent for family coverage.

But since 2003, the survey found, the average premium for family coverage rose 80 percent - from $9,068 to $16,351.

This year, the average annual premiums for employer-sponsored health insurance are $5,884 for single coverage and $16,351 for family coverage. Worker contributions average $4,226 for employees getting family coverage through large firms, the survey found.

Eibner said predicting the future of premiums is difficult. But in general, she and others said, larger firms should see little change beyond the typical increases - particularly in the cases of self-funded group plans, in which the employer assumes the financial risk for providing health care.

The lower costs are aided by having larger pools of employees. According to the American Academy of Actuaries, the composition of the risk pool is one of the factors influencing premiums, because it allows the costs of the healthy to subsidize the costs of the unhealthy.

And generally, the larger the risk pool, the more stable the premiums.

"Larger companies have the ability to deal with change by spreading the overhead over a larger number of employees," Roberts said.

Kate Marx, a spokeswoman for Humana, said some large employers will see increases in premiums, partly depending on what they cover now. For example, she said, ACA provisions may require more coverage for women's preventive care than some large companies offer today.

But while large companies may not pass along much bigger premiums, experts said the companies might cut health costs in other ways, such as increasing co-pays for employees or reducing coverage for certain groups.

UPS partly blamed the health law when it told white-collar workers two months ago that 15,000 working spouses eligible for coverage from their own employers would be excluded from the UPS plan in 2014.

Company officials said the move, which applies only to non-union U.S. workers, should save $60 million a year. Many analysts note that such moves are part of a long-term trend of shrinking corporate benefits, but UPS repeatedly cites Obamacare in explaining its decision.

"I think companies are going to look at what their options are, and ask: 'What can I do to keep these costs under control?'" Sunderland said.

Experts acknowledged that many companies have already been doing this for years as health care costs have risen. In addition to reducing benefits and shifting more costs to employees, they said, some have put in place employee wellness programs to reduce health costs.

Outlook for small firms

Sunderland echoed others in saying small firms are "where we hear the majority of concern" about Obamacare.

But even there, Eibner said, the impact of health reform depends on the characteristics of the firm and what kind of insurance it now offers. For instance:

-- Premiums would rise more steeply at small firms that upgrade their coverage from skinnier to more robust plans.

-- Small firms with a cadre of younger, healthier workers would likely see larger increases than those whose workers are generally older or sicker.

Currently, the sick are charged more than the healthy; women are charged more than men, largely because of reproductive costs; and rates can vary dramatically by age. But the ACA doesn't allow rate variation in small group coverage based on gender or health, and allows only a maximum 3-to-1 ratio for age.

Experts also said much depends on the size of the company.

Businesses with 50 or fewer workers won't be penalized for failing to provide health insurance, while those with more than 50 full-timers will face penalties in January 2015. Munnich and Sunderland said this may lead some businesses with around 50 employers to hold back on hiring more workers.

Also, small businesses with 50 or fewer full-timers can get insurance through health benefit exchanges - and some of the smallest ones may be eligible for tax credits.

Still, Munnich said, some small businesses with lots of low-wage employees may decide against providing health insurance, instead encouraging workers to purchase coverage on the exchange.

Over the long term, Munnich said it's unclear how Obamacare will continue affecting premiums. Because people will be able to compare plans head-to-head on health benefit exchanges, she said it could put pressure to lower premiums.

"This is changing the landscape of competition," she said. "There's a lot of uncertainty and a lot of forces at work here."